Joe Biden’s projected victory in the US presidential election has given certainty to stock markets over the future of the world’s largest economy.

Democrat candidate Biden has edged out the Republicans’ Donald Trump, though it looks like Congress will remain divided with the Democrats taking control of the House of Representatives and the Republicans the Senate.

Both Biden’s victory and the likelihood of a divided Congress have many implications for investors.

For starters it’s good news for those who hold any of the big tech stocks, or a tracker or exchange-traded fund (ETF) following the tech-heavy Nasdaq and S&P 500 indices.

The likes of Amazon, Apple, Facebook and Google owner Alphabet rallied when the result became clear, which on the face of it seems somewhat perplexing given that Biden wants to reform US antitrust law, a move which is designed to curb the power of the tech giants and break their monopolies.

He’s also planning to raise corporate tax, with an eye specifically on the likes of Amazon and Apple, something which would have a significant negative impact on such companies’ earnings per share, one of the key metrics used by Wall Street analysts.

But a divided Congress means this is going to be harder to achieve, with a Republican-controlled Senate unlikely to roll back on the legislation put in place during their time in power.

Having rallied significantly ahead of the election, clean energy stocks again gained ground when it became clear Biden would win, with the Democrat pledging to rejoin the Paris agreement and invest in low-carbon technology to help the US reach net zero by 2050. But the likelihood of a split Congress means recent gains have been limited, and both Biden and the clean energy sector face headwinds from the Republican Party both nationally and at state level.

Meanwhile miners are set to be more in demand from investors again, as a more predictable trade policy under Biden should reduce tensions with China and other countries and remove some of
the headwinds facing commodities like iron ore and copper.

In addition, reports before the election suggested Biden’s campaign told miners it would support them if they boosted production of the metals needed to make electric vehicles, solar panels and other products crucial to his climate plan.

A return to more conventional governance and lower geopolitical risks – as well as a smaller than expected stimulus package – will reduce demand for the greenback as a safe haven asset. This should benefit emerging market equities the most.

Historically investors have pulled money out of the US when its currency is weak and reinvested the proceeds into emerging markets where the returns of local currency-denominated equities and bonds look better in dollar terms.

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